United States of Europe?

It’s fascinating to watch the unfolding shambles in Europe, rather like observing, from a nearby lifeboat, the Titanic slowly but inexorably slipping under the water. “Expert” predictions are either gloomy or non-credible; either the EU will break up or its currency will collapse, or both. The dominoes are poised to tumble. But recently, a whisper has been heard about a rather different possible outcome. Conspiracists will leap at the chance to say the crisis was planned for that purpose.

Instead of just bailing out the PIIGS with money stolen from German and other taxpayers, the idea is being floated that to prevent any recurrence, at least, a central European authority should control the budgets of member states.

The ultimate blame for the mess there is the institution of democratic government. As Bastiat famously noted, “Government is the great fiction through which everybody endeavors to live at the expense of everybody else” and in this context the parasitic voters of Greece and elsewhere became able a few years ago to live not only at the expense of other, taxpaying Greeks but also at that of other, taxpaying Europeans; those vast €-loans were handed over to the Greek government on the naïve assumption that it could be trusted to pay it back with interest. It – and others – cannot. Hence the crisis. I said the assumption was naïve, but really it was founded on the fact that while all governments are always ultimately bankrupt – they have no assets, for those they seem to have were all stolen – they do have the power to tax. It’s no more a legitimate asset than the Mafia’s power to collect protection money, but in practice it normally works. It isn’t working now, because large parts of the respective populations are rioting and striking; not only are they unwilling to pay more taxes or suffer the loss of government handouts like sinecure jobs, they are unable to do so, for the heavier the tax burden the less can be produced to furnish a tax base. The Laffer Curve is triumphant. So has the much-vaunted “power to tax” encountered its limit.